In January, existing-home sales increased to the highest annual rate in six months, and subpar supply levels propelled price growth to the fastest increase since last April, according to the National Association of Realtors® (NAR). The West was the only region to see a decline in sales in January.
Total existing-home sales changed slightly, inching 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December, according to the NAR. Sales are now 11 percent higher than a year ago, which is the largest year-over-year gain since July 2013 (16.3 percent).
Lawrence Yun, NAR chief economist, says existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015 (5.48 million).
“The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints,” he says. “Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession.”
Total housing inventory at the end of January increased 3.4 percent to 1.82 million existing homes available for sale, but is still 2.2 percent lower than a year ago (1.86 million), according to NAR. Unsold inventory is at a 4-month supply at the current sales pace, up slightly from 3.9 months in December 2015.
“The spring buying season is right around the corner, and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” says Yun. “Home prices ascending near or above double-digit appreciation aren’t healthy—especially considering the fact that household income and wages are barely rising.”